Rockford aldermen poised to approve downtown hotel deal

Saturday

Apr 5, 2014 at 11:00 AM

By Kevin HaasRockford Register Star

ROCKFORD — Aldermen are poised to approve a multimillion-dollar development deal Monday that would give new life to a century-old downtown skyscraper, but it would take just a couple of City Council members with doubts to delay the vote for a week.

Eleven of the 14 have expressed support for a redevelopment agreement with Wisconsin-based Gorman & Co. that would turn the Ziock building, 416 S. Main St., into a hotel and conference center.

Under City Council rules, however, two aldermen in favor of delay would push the vote into next week.

Despite the council’s majority, there are lingering questions from some supporters and detractors who want reassurance about the city’s ability to pay for its part of the deal.

The agreement would require the city to pay $16.6 million over 20 years to build parking decks and surface parking lots downtown. An additional $2 million would turn South Main from a one-way to a two-way street between Cedar and State streets and to build a pedestrian crossing along the Chestnut Street bridge.

Aldermen may decide to alter the city’s 2014-18 capital improvement plan to free money to support the Ziock deal.

Some want to ensure that the city can finance the project without jeopardizing neighborhood road improvements. That could mean delaying a $15.5 million revamp of the Whitman Street interchange and could give aldermen the confidence they need to support the Ziock deal.

Doing the math

Depending on how the financial tinkering pans out, the deal could end up with support from as many as 12 or 13 aldermen.

Ann Thompson-Kelly, D-7, voted against the deal at the committee level last week but has expressed general support for the project. She doesn’t think the financial model presented by city administration adds up, so she can’t support the redevelopment until it does.

Frank Beach, R-10, also has doubts about the city’s ability to finance the project but hasn’t ruled out his support.

“I need to make sure in my own mind that we can actually sustain the cost of what we’re asking to do,” he said. “I think everyone honestly is trying to move toward a comfort zone that is reliable and sustainable.”

Linda McNeely, D-13, is opposed to the deal. The project is at the southwestern edge of her ward.

“I don’t think the city is in a position to keep spending money,” said McNeely, who consistently votes against initiatives proposed by the administration of Mayor Larry Morrissey.

City administrators say the capital plan contains enough money to pay for Ziock-related parking improvements. The $16.6 million in parking improvements would be paid for with $2.8 million in new market tax credits, $9.3 million in parking fees and $4.5 million in sales tax revenue. The city’s annual debt payment for the parking improvements would be about $830,000.

If the city agrees to make parking and street improvements, and provides several tax incentives, Gorman & Co. will buy the city-owned Ziock building for $250,000 and spend $52.7 million to turn it into a 150-bed hotel and conference center.

Outside support

Other developers are urging aldermen to approve the deal. Justin Fern of Urban Equity Properties acquired the vacant Hanley building, about a block away from Ziock, and is ready to sink $10 million into its redevelopment if aldermen give their blessing to Ziock.

Fern is not the only one watching the Ziock project closely to determine whether to invest in downtown Rockford. Architect Gary Anderson called the planned redevelopment a “watershed event.”

“There is a whole new optimism that we didn’t have before, and we’ve got to fuel that fire and keep the momentum going,” he said. “We have not had that kind of atmosphere in downtown Rockford in 40 years.”

The Ziock proposal carries a sense of urgency because aldermen must move the deal forward soon to give developers time to take advantage of historic tax credits needed to finance the project.

The project must be completed by Dec. 31, 2016, to use the tax credits. That’s an aggressive time frame: Developers must apply for federal and state historic tax credits, create detailed designs, complete a financial package that includes foreign investors, begin to market the conference center to users and otherwise lay the groundwork for construction.

Parking & jobs

City officials say parking has been in short supply in downtown Rockford since 2012, when structural problems forced the closing of 400 spaces on the concourse parking deck attached to the BMO Harris Bank Center.

Making those improvements now would enable the city to leverage its parking costs to gain a $52 million private development, said attorney Michael Schirger of the Friends of Ziock, which is dedicated to the rebirth of the 13-story former factory.

“We have a parking problem. We’re going to have to address it. If we address it today, we’re going to get a $52.7 million bump,” Schirger said. “If we address it tomorrow, those opportunities will be gone. There will be no return on your investment.”

Construction of the hotel would support about 250 jobs, developer Gary Gorman said. Once completed, it would employ the equivalent of 75 full-time workers in its first year. By its fifth year, the hotel and conference center would employ or spur the creation of jobs for the equivalent of 280 full-time workers who would earn $5.5 million, according to an analysis by Hunden Strategic Partners on behalf of the city and Rockford Area Convention & Visitors Bureau.

Good for all

The development can help reduce crime by creating opportunities for employment, said Ald. Jeanne Oddo, D-8. Numerous studies link crime to high unemployment.

“People who have a job and are earning money are less likely to go out and take desperate measures,” Oddo said. “It will help.”

Venita Hervey, D-5, said aldermen must be certain that the financial package behind the project is viable and will have to determine what work will be sacrificed to pay for it. Still, she supports Ziock and hopes it will encourage more development on the city’s south and west sides. For years, Hervey’s mantra has been “so goes downtown, so goes west Rockford.”

“To just say, let it die, let the buildings decay and just forget that part is attached to Rockford — it doesn’t work that way,” she said. “That formula has never worked for any city that has done it.”